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George Soros: My Life and "Times Where Normal Rules Don't Apply"

Posted Apr 10, 2009 09:08am EDT by Aaron Task in Newsmakers
Believing the globe was "heading for worst financial crisis of our lifetime" George Soros came out of retirement in mid-2007 to actively manage money again. Clearly the hedge fund legend hadn't lost his investing prowess; Soros Fund Management's flagship Quantum fund rose by over 30% in 2007 and by about 8% in 2008, netting total profits of about $4 billion in the process.

In the accompanying video, the final segment in our series, Soros talks about how he not only saw the crisis coming, but was able to profit from it in a way few others were able to manage. Soros says the "formative experience" of spending his childhood in Nazi-occupied Hungary taught him "there are times where normal rules don't apply."

That, in turn, helped him develop a framework of viewing financial markets that runs counter to the efficient market hypothesis, which had dominated economic circles prior to the current crisis.

As detailed in his investing classic The Alchemy of Finance and revisited in his latest book The Crash of 2008 and What It Means, Soros' theory of reflexivity is based on a two-way relationship between the markets and market participants. In sum:

  • Instead of accurately reflecting underlying reality, the markets typically distort it.
  • This "mispricing" of the markets affects the decision-making of investors and policymakers. That, in turn, can impact the markets, further distorting reality and reinforcing how those same participants view it.

Fast forward to the present: Believing "the real danger of collapse has passed," Soros has gone back into retirement as far as money management goes, but he's clearly not resting on his laurels or slowing down to enjoy his ‘golden years'.

"I think right now frankly I'm more concerned trying to figure out what kind of system do we need to create to make world a better place," he says. "I've devoted my monies to my foundations [and] if I can make a contribution on that level, it's worth spending my time on that."

Whether or not you agree with his methods or politics, it's clear Soros can be a powerful force to affect change in the world.

Earlier:

 

110 Comments

tomtom
tomtom - Friday April 10, 2009 09:23AM EDT

soros should relocate to russia denounce his citizenship,and go into extensive therapy,he is a waco and should be locked up!

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:23AM EDT

Tech ticker doesn't want to give this guy up! This is going to get some negative comments but that's what they want.

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:32AM EDT

Couldn't resist a great shorting opportunity, aye George?

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:32AM EDT

ZZZZZZZZZZZZzzzzzzzzzzzzzzzzzzzzz..............

RobertK
RobertK - Friday April 10, 2009 09:33AM EDT

Soros hates our country and wishes nothing more than to see its demise. Always keep that in mind when listening to anything he says. Enough said.

marx
marx - Friday April 10, 2009 09:43AM EDT

Soros like Kissinger have done much to destroy democracies around the globe.He is an opportunist for himself and the private banking cartel. Very disappointed that Yahoo would give this criminal a voice here.

Art
Art - Friday April 10, 2009 09:46AM EDT

How can he be so smart about finance and so dumb about poilitics?

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:46AM EDT

Soros is EVIL. He himself admitted he's making money out of other people misfortune. In this case other countries misfortune. But he really pissed coz he failed to bring Malaysia down during Asian Financial crisis 1997. It is reported that Soros lost billions when Malaysia prime minister then Dr. Mahathir fix its currency and curb outflow of hedge funds. Malaysia succeed in defeating Soros. Until today, Soros never try to mess with Malaysia knowing fully well that Malaysia already set a trap for Soros in case he try his evil agendas again.

marx
marx - Friday April 10, 2009 09:47AM EDT

Soros made his first billion in 1992 by shorting the British pound with leveraged billions in financial bets, and became known as the man who broke the Bank of England. He broke it on the backs of hard-working British citizens who immediately saw their homes severely devalued and their life savings cut drastically in comparative worth almost overnight.

Karl J
Karl J - Friday April 10, 2009 09:49AM EDT

It is a treat to have someone who is uncommonly perceptive share his insights. The responses to other Tech Ticker guests have included many flames along the lines of, "They didn't see it coming, so why should we care what they say now?" In that light it is amusing to see Soros getting flamed in the recent segments... for being right!

j
j - Friday April 10, 2009 09:55AM EDT

Soros is a self-serving egomanical pig who deserves to die for ruining our economy through naked shorting. Keep kissing his negative ass, Trash.

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:57AM EDT

Obama says he stands between the guys with the Pitch Forks and the Banksters... Soros has to be one of them... No wonder he got OBAMA elected.... MOVE ON George

Frank
Frank - Friday April 10, 2009 09:59AM EDT

When I see mostly negative comments about any article, I wonder, Is this article accurate? Responders tend to argue against those things not within their beliefs. I take non specific arguements as emotional belief based responses. Even though I disagree with his political views, I do think he is right that the markets distort. News is the reason. Good news tends to over distort to the positive and bad news tend to over distort to the negative. The most accurate values are approached when little new news is seen. I find him Soro's thinking to be interesting and thoughtful. The world needs more thinkers and fewer propagandists.

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:59AM EDT

Yea, he gives us insight on the Bush years, and how they screwed us into finacing the wrong war, causing our own economy to mimick his old country.

donfurio
donfurio - Friday April 10, 2009 10:00AM EDT

blodget/task=socialists..

Jay
Jay - Friday April 10, 2009 10:02AM EDT

Okay, so he predicted "the collapse". What's his track record on other things? Has he made faulty predictions?

Jack
Jack - Friday April 10, 2009 10:03AM EDT

Soros is a blowhard. His key to success is being anti-American. He made a few good bets, but he doesn't offer any unique insightful views. Right now, he is anti-American, but he is really late to the party. He jumped back in when it was obvious to everyone that America over extended and leveraged itself. The markets distort reality? Duh!!!! Markets reflect the CURRENT VIEWPOINT and project that into the future. They discount based on current views, which may or may not reflect current reality. They are good at tracking trends, but poor at changing directions. The financial market meltdown was helped immensely by liberal governmental policies, which socialized risk while keeping SHORT TERM profits privatized so pricks like Soros could cheat the average citiizen.

Milton
Milton - Friday April 10, 2009 10:06AM EDT

Soros and Buffett are proof we have a free and honest market place. If we had government financed elections, we would have honest elections too.

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 10:07AM EDT

Please stop giving media time to those that don't live in this country, don't like it because we are the most wealthy and powerful nation on earth, hates most things we do, but benefit from our market turmoil. Aaron, why are you so obsessed with this anti-american? Try finding some supporters of a strong america for a change.

Thrift Maven
Thrift Maven - Friday April 10, 2009 10:08AM EDT

Maybe he isn't so dumb about politics. He lived through the Nazi regime (those "aren't we wonderful folks" who saw everyone else as not so wonderful). Interesting that both Soros and Buffett find worthwhile thinking among Democratic politicians.

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